(Source: MIRS.news, Published 02/03/2023) The Senate Democratic Fund could face a $1 million fine if the Bureau of Elections finds it improperly shielded a last-minute loan from campaign finance reports.
Three days after the final campaign finance deadline, on Oct. 28, the Senate Democrats took out a $1 million bank loan to cover their final campaign activities for the Nov. 8 general election.
Eric Ventimiglia of Michigan Rising Action wrote in a formal complaint to the Bureau of Elections that the Michigan Campaign Finance Act requires organizations to file special 24-hour contribution reports when raising $1,000 or more from a single source within two weeks of an election.
If a committee fails to do so, they are subject to a fine equal to the amount of the hidden contribution, which in this case is $1 million.
"Michigan Democrats continue to show they think they're above the law by hiding where they received their contributions. The people of Michigan deserve to know the truth about who is funding elections in their state," Ventimiglia said. "Will Secretary of State Jocelyn BENSON continue to turn a blind eye, or will she enforce penalties for the rules everyone else is required to follow?"
However, there's an open question as to whether a bank loan falls under the definition of a contribution.
In 1978, the Secretary of State's office made a declaratory ruling in a case concerning former gubernatorial candidate Patrick McCollough that "A loan from a corporate lender in the business of making loans and made in the ordinary course of business, should not be reported as a contribution."
It's also argued that the Secretary of State requires bank loans to be reported as "other receipts," not "contributions." If a bank loan was a contribution, it would be capped at the contribution limit, but it's not. Besides, a bank is a corporation which is not able to legally make contributions.
Attorney Eric Doster disagrees with this analysis. He says the Campaign Finance Act defines a loan as a contribution.
Section 4 of the act reads, "'contribution' means a payment, gift, subscription, assessment, expenditure, contract, payment for services, dues, advance, forbearance, loan or any donation of money . . ."
"This is an easy one," Doster said. "It's a statutory definition."
Another question brought up by another source is whether someone underwrote the debt, and if there is an underwriter, does that change whether the contribution is a donation?
The impact of this seemingly esoteric legal argument is significant.
As of the end of 2022, the Senate Democrats had not begun paying off the $1 million loan and only have $128,540 in cash on hand. If the Bureau of Elections rules against the Senate Democratic Fund, the law reads that the guilty party is subject to a fine of not more than $1,000 or the amount of the omitted contribution, "whichever is greater."
As it stands, the Senate Democrats have the highest amount of outstanding debt among the four caucuses coming out of the 2022 election.
The Senate Republican Campaign Committee has $700,000 outstanding. The House Democratic Fund still needs to pay off $293,950. The House Republican Campaign Committee has no debt, having taken out no loans during the campaign.
